Process Street - Tax Preparation Checklist

Process Steet’s Tax Preparation Checklist has been designed to guide you through the preparation of your individual tax accounts and the preparation of your business tax accounts as required. 

The Tax Preparation Checklist is designed to be used by individuals and small business owners, to be completed in advance of the tax due date.

Process Steet’s Tax Preparation Checklist has simplified the preparation of your individual tax accounts and your business tax accounts into the below series of tasks:

  • Individual Tax Preparation 
    • Enter Personal Information 
    • Income
    • Homeowners
    • Education 
    • Family 
    • Donations 
    • Tax Deductions 
    • Other Deductible Expenses
  • Business Tax Preparation Checklist 
    • Analysis Of Current And Past Financial Data
    • Benefits, Loans And Transactions Documents 
    • Payroll Data
    • Expense Details 
    • List of Assets And Depreciation
  • Final Forms 

3000-2800 BC dates the first known system of taxation, developed in Ancient Egypt.

Taxation systems have advanced since the BC age, with the aim to support common resources and services for the formation of a positive, productive, and principled economy

The World Happiness Report rated Scandinavian countries such as Finland and Denmark to be unsurpassable when it comes to happiness.

But why so happy? 

When you consider the taxation system of these countries, Denmark citizens pay the highest amount of tax, averaging around 45% of Denmarks GDP from 2000-2016. This means the basic needs for the people are met with the services and resources taxation provides. 

Citizens of Denmark state that they feel looked after, secure and safe knowing their basic needs will always be met.

Hence there is an obligation to support the economy, to take the time and accurately prepare your own, and/or your business taxes. 

Tax preparation can be a daunting process, as it involves many steps with obligatory guidelines and regulations put in place by the IRS.

Failure to follow the required guidelines, or the complete omission of your tax payment entirely, will result in both fines and penalties and can be punishable by law.

The aim of Process Steet’s Tax Preparation Checklist is to assure the required guidelines are followed during the tax preparation for both individuals and small businesses.

By adopting Process Steet’s checklist approach, the complexity of tax preparations is removed and the completion of critical steps is ensured.

In this template, you will be presented with specialized questions given as form fields. Different form fields are used, such as subtasks, dropdown menus, short answers, long answers, date, file upload, and weblinks.

You can populate each form field with your own specific data. 

In addition, our stop task feature has been used to enforce task order when needed. 

Our conditional logic feature has been used when required to guide you through the correct process path specific for your entered data.

State Assistance Needed

In this Tax Preparation Checklist, you will be presented with the following form fields, which you are required to populate with your own specific data. More information is provided for each form field via linkage to our help pages:

To begin the Tax Preparation Checklist, enter the required details into the form fields below.

The dropdown form field is a conditional step. Selecting 'Yes' or 'No' from the dropdown menu will lead you to the relevant pathway in your active checklist.

Record tax advisor/accountant contact details

Record the contact details of the individual who is responsible for reviewing and delivering final tax documentation to the IRS. This will enable you to easily contact them via email upon completion of the checklist.

Individual Tax Preparation:

If you feel unsure about how the individual tax preparation process works or why it's a must-do, find out more before getting started. 

Some additional resources you may find helpful are last year's 1040A form and a comprehensive instruction guide provided by the IRS. 

Lets get going!

Enter personal information:

Enter your own personal data in the form fields below. Your personal data will be used to customize the checklist to suit your specific needs.

During the 'Enter personal information' tasks, Process Street's conditional logic has been used to ensure that your answers to the below simple questions are compiled to present you with tasks relevant to you only.

Enter names, address and other important details

Enter dates of birth

Enter your date of birth, and is applicable, the date of births of your spouse and any dependents you may have.

Enter social security numbers

  • 1
    Submit your own social security number (SSN).
  • 2
    Submit the SSN numbers for your spouse and dependants.
  • 3
    Gather your SSN numbers and have them ready to disclose.

Attach copies of last year's tax returns

Disclose copies of last years tax returns for you and, if applicable, your spouse.

Enter your bank account and routing number

Enter your bank account and routing number if you would like your refund to be transferred via direct deposit.

This is a stop task, you cannot continue with this checklist until this task is complete.

  • 1
    Enter your bank account number
  • 2
    Enter your routing number


The next stage of filling your tax return is selecting your sources of income and disclosing them in full 

This represents a big chunk of the form so be sure to take your time and get it right.

Select all relevant sources of income

Personal sources of income must be entered in this section. This includes information such as salary, rental income, investments, business income, and any other miscellaneous sources. 

The data entered below will be used to implement our conditional logic feature and present you with only tasks that are relevant to your needs. 

This income section represents a large portion of the individual tax preparation process, so be sure to take your time to ensure the information entered is correct.

Here's a simple walkthrough of how to calculate your adjusted gross income (AGI)

Attach your W-2 form

In the case that tax was withheld, you must also attach form(s) 1099-R

Report your refund with form 1099-G

Report your refund with form 1099-G

Your local government agency would have issued you a 1099-G Form due to you receiving unemployment compensation and/or a state or local refund last year. 

Make sure to report the refund is your deducted your state taxes last year.

To find out more information in relation to the 1099-G form, and whether this applied to you, visit the IRS website.

Disclose income from investments

In addition to any personal income, you must also disclose any income you have earned through investments. Investment income consists of:

  1. Interest payments (Form 1099-INT)This includes savings account, money market account and mutual funds.

  2. Dividends (Form 1099-DIV)This includes dividend income and interest income from shareholdings or mutual funds respectively.

  3. Capital Gains (Loss) (Form 1099-B)This includes the sale of stocks, bonds, mutual funds, real estate and collectibles.

  4. Undistributed Capital Gains - (Form 2439)This is a tax form provided for by the Internal Revenue Service (IRS) that informs a shareholder of any undistributed long-term capital gains

If any of these apply to you, be sure to download the relevant form(s), attach them below and to your final 1040 form. 

Disclose rental income

Taxable rental income is the money you receive allowing other people to use your real estate or personal property. 

Rental expenses are allowed to be offset from your rental income.

Use Schedule E Form 1040 to disclose rental income.

Disclose business income

Taxpayers with earnings from a business, freelance or contractor work are considered self-employed.

Business income and expenses can be reported using Schedule C Form 1040

Disclose farm income

Farmers, who are considered as self-employed, should report income and expenses from their farming business on Schedule F Form 1040.

Disclose financial benefits from health savings accounts

Form 1099-SA, titled "Distributions From an HSA, Archer MSA, or Medicare Advantage MSA", is given to those taxpayers who received financial benefits from health savings accounts (HSAs) or medical savings accounts (MSAs).

Disclose gambling winnings

Gambling winnings are fully taxable and must be reported on your tax returns in Form W-2G.

Gambling income comprises winnings from: 

  • Lotteries 
  • Raffles
  • Horse races 
  • Casinos 

It also includes cash winnings and all prizes such as cars and trips priced at their fair market value.

Disclose alimoney income

Alimony income is defined as payments received from a spouse or former spouse under divorce or separation instruments, and are generally taxable income.

Only cash payments, including checks or money orders, qualify as alimony. 

A divorce or separation instrument is any of the following:

  • A decree of divorce or separate maintenance or a written instrument incident to that decree
  • A written separation agreement
  • A decree or court order requiring a spouse to make payments for the support or maintenance of the other spouse

Report alimony income directly on your 1040 form 

Disclose pensions and annuities

This is broken down into two parts (a & b). the 'a' part reports the gross amount of distributions you received from pensions and annuities, while the 'b' part reports the taxable portion of these distributions.

For example, you may have received a distribution of $12,000 from your 401(k) plan, but only $10,000 of that amount was taxable. The $12,000 gross amount would, therefore, go in line 'a', and the $10,000 taxable amount would go in line 'b'. Line 'b' is the amount that contributes to your overall taxable income.

Distributions from the following accounts are entered on this line of your tax return:

  • 401(k) plans
  • 403(b) plans
  • Civil Service Retirement System (CSRS)
  • Federal Employees Retirement System (FERS)
  • Foreign pension plans
  • Governmental 457 (b) plans
  • Thrift Savings Plan

Discover more about this section of the 1040 form if you feel unsure about what you need to do.

Report pensions & annuities directly on your 1040 form


As a homeowner, there are certain requirements that you must meet when filing your tax return. These include:

  1. Completing Your Mortgage Interest Statement - Form 1098
  2. Filing Your Property Taxes

Complete your mortgage interest statement

If you have received $600 or more from mortgage interest during the year you should file Form 1098.

Form 1098 also includes a section for you to declare mortgage insurance premiums. If you are paying a mortgage, chances are you are also paying mortgage insurance. Federally-backed loans, such as FHA loans, require that borrowers pay mortgage insurance, just as like private lenders and banks. Fortunately, mortgage insurance is a tax-deductible expense for most homeowners.

If you are unsure about what you need to do, read more about it on the IRS website.

Deduct personal property taxes

If you pay taxes on your personal property and owned real estate, they may be deductible from your income tax bill.

You may be surprised at how much property tax you pay because a large percentage of homeowners pay it via their mortgage loan. If you fall into this category, it means you are still eligible to get a property tax deduction as the mortgage company has been paying the tax with your money.

Check the 1099-INT tax form the mortgage company is required to send you each year. Both the amount of mortgage interest paid for the year and the amount of property taxes paid annually should be listed. Enter the amount of interest you can deduct on Line 6 of Form 1040, Schedule A from the IRS.

Attach the form below once completed. 


For students and recent graduates, there a few ways to get some of your college expenses back in your pocket when filing for tax returns. 

Deduct interest paid on student loan

If you have paid any interest on your student loan, you can receive a maximum deduction of $2,500.

This max is per return, not per taxpayer, even if both spouses on a joint return qualify for the deduction.

The student loan interest amount goes in Form 1040 - Adjustments Section.

Find out which requirements you must meet before filing. 

Deduct college expenses

There are two options for getting back some of the college expenses you have paid during the year. The first is the claim education credits, and the second is tuition and fees deduction.

Find out more to evaluate which is most suitable for you.


Making sure you get your money's worth for taking care of you and your loved ones :) 

Claim child and dependent care credit

If you paid a daycare center, babysitter, summer camp, or other care providers to care for a qualifying child under age 13 or a disabled dependent of any age, you may qualify for a tax credit of up to 35 percent of qualifying expenses of $3,000 for one child or dependent, or up to $6,000 for two or more children or dependents.

Find out more to see if you meet the qualification requirements

Claim credit for adoption expenses

To claim the adoption credit or exclusion, you must complete Form 8839 and attach it to your Form 1040.  

In 2017, the maximum amount of tax credit for qualified adoption expenses was $13,570 per child. 

Find out more about Form 8839 to see if you meet the requirements and how you can go about completing it. 

Attach the form below once completed. 

Deduct medical and dental expenses

As is the case with Charitable Contributions, if you itemize your deductions for a taxable year in Schedule A Form 1040 you may be able to deduct expenses you paid for medical and dental care for yourself, your spouse, and your dependents. 

You may deduct only the amount of your total medical expenses that exceed 7.5% of your adjusted gross income. 

Find out more from the IRS website if you feel unsure about how to deduct your medical expenses.


Certain donations you've made during the year could be eligible for deduction from your tax bill.

Deduct charitable contributions

If you have made any charitable donations during the year to qualified organizations, they may be deductible. They should be disclosed in the "Itemized Deductions" section of Section A Form 1040.

Read more to find out how you can get this done. 

Tax deductions:

There are 4 types of deductible nonbusiness taxes:

  1. State and local personal property taxes
  2. State and local general sales taxes
  3. State, local and foreign income taxes
  4. State, local and foreign real estate taxes

"To be deductible, the tax must be imposed on you, and you must have paid it during your tax year. Taxes may be claimed only as an itemized deduction on Form 1040, Schedule A.pdfItemized Deductions." - IRS

NOTE: You can elect to deduct state and local general sales taxes instead of state and local income taxes, but you cannot deduct both.

You can read more about deductible taxes on this IRS webpage.

Deduct personal property taxes

You can deduct personal property taxes paid during the year as an Itemized Deduction in Schedule A Form 1040.

An example of personal property tax is the tax imposed on the value of a car and assessed as part of an annual vehicle registration fee.

Read more about filing your personal property tax if you feel unsure about what is eligible and how you go about disclosing them.

Deduct sales taxes

When using Schedule A Form 1040, Itemized Deductions, you can elect to deduct state and local general sales tax instead of state and local income tax.

Deducting sales tax instead of income tax might be useful if you live in a state without income tax or if you make a big-ticket purchase, such as a motor vehicle, before the end of the tax year.

More info is available on the IRS website.

Deduct foreign real estate taxes

This is often a complex area of tax filing for which it is recommended you seek professional advice. 

As is the case with other tax deductions, you report foreign real estate taxes in Schedule A Form 1040.

You can read about it in your own time to better understand how you might be eligible. 

Other deductible expenses:

Other expenses you can claim include:

  1. Work-related expenses
  2. Teacher/educator expenses
  3. Casualty and theft losses
  4. Lega fees

Claim work-related expenses

To claim work-related expenses like travel, uniforms, union dues, job hunting expenses and education, you must declare them as itemized deductions in Form 1040, Schedule A.

You can only deduct the portion of your work-related expenses that exceeds the IRS floor: 2% of adjusted gross income.

Claim teacher/educator expenses

If you are an eligible educator, you can deduct up to $250 of unreimbursed trade or business expenses. 

For details on how to submit this deduction on your 1040, review the guidelines provided by the IRS.

Claim casualty and theft losses

What qualifies as a casualty?

A casualty is damage, destruction, or property loss resulting from one of these identifiable events:

  • Sudden event — swift, rather than gradual or progressive
  • An unexpected event — ordinarily unanticipated and unintended
  • Unusual event — not a day-to-day occurrence

You can claim casualty and theft losses on personal property as itemized deductions. Use Form 4684 to figure your losses and report them on Form 1040, Schedule A.

Find out more details regarding what qualifies as a casualty or theft and how you claim losses from them. 

Business Tax Preparation Checklist:

Information from all across the business needs to be gathered and analyzed to make certain that the taxes paid are accurate and on time

This is why we have put together the business tax preparation checklist

Working through this list will provide you with a simple process to retrieve all the necessary documents and information for compiling your tax return. 

As you go through, check off each set of materials once you have recovered and reviewed them. You can then pass this information on to your tax advisor using the final form field provided, making the process easier for everyone.

The information listed in this checklist covers all necessary materials for the submission of both Form 1120 and Form 1065 - covering both corporation and partnership structures.

Let's get going!

Analysis Of Current and Past Financial Data:

Collect copies of federal and state tax returns

Federal and state tax returns should be examined in order to determine the accuracy of taxes paid.

Reviewing previous documents is an effective way to refamiliarise yourself with the process and materials required to complete a tax return.

You should have these filed appropriately as records of your company's previous payments.

Consult copies of articles of incorporation

Articles of partnership/incorporation should be reviewed in order to determine the appropriate tax rates.

These are key documents for any business and will show clarify how your company is structured. Your company may be an LLC, an s-corp, or a c-corp if registered in the United States, for instance. 

If your business operates as a corporation you will likely have to pay corporate tax. The tax rate varies depending on how much money your company makes.

Whereas, if your business has a joint partnership structure or is an s-corp the shareholders of the business pay tax personally on the dividends they receive.

Calculate year end balance sheets

Year-end balance sheets should be examined in order to determine the applicable taxes to be paid. 

The balance sheet provides a breakdown of assets, liabilities, and shareholders equity. 

To create your balance sheet, you can use our balance sheet statement preparation checklist.

Use the form field below to upload a copy of your balance sheet.

Review year-end bank statements

Year-end bank statements should be checked to verify applicable taxes to be paid.

It is important to double check these documents to be sure all financial activity is accounted for and accurate.

Review gross receipts from sales or services

Gross receipts from sales or services should be analyzed in order to determine appropriate taxes to be paid.

You can review your monthly income statements, sometimes called profit and loss statements, for these figures. 

Use our Income (profit and loss) statement process to see how these procedures are structured.

Use the form field to record your gross receipts or sales. You will use this figure for the first entry field in your tax return.

Check sales records (for accrual based taxpayers)

Sales records are sales invoices with details such as:

  • the item purchased 
  • the date when the item was purchased 
  • the selling price 
  • the company who sold the item 
  • the customer who bought it
  • related contact information

Consult these sales records to ensure all details correspond with the other materials gathered.

Calculate total returns and allowances

Returns and allowances from year-end income statements should be taken into account in preparing tax returns.

The returns and allowances section reports the commodities returned by the customer and the allowances granted to a customer due to improper or defective merchandise.

Returns and allowances are declared on item 1b of the IRS Form 1120 which you will use to file your return. The total figure given is deducted from the gross sales receipts you gathered in task 7.

Gather business checking/savings account interest

Consult your bank interest built across the year to find the total amount of interest earned. This should have been reported in your general ledger.

Use Form 1099-INT to submit this material. You can find the instructions for filing this particular form on the IRS' website.

Identify other income

Other income should be checked to verify appropriate taxes to be charged.

Other income is defined as reported earnings from business activities outside of core business operations.

Use the sub-checklist below to tick off applicable examples:

  • 1
    Interest income from notes receivables
  • 2
    Dividends and interest income from long-term investments
  • 3
    Net earnings from the sales of assets other than inventory
  • 4
    Net earnings from sales of scrap items
  • 5
    Gain on foreign currency exchange
  • 6
    Miscellaneous rent income

Benefits, loans and transactions documents:

Compile details of fringe benefits

There are a range of deductibles and tax credits which your company may or may not be eligible for. 

Gather any materials related to the fringe benefits your company offers in case they can prove beneficial for tax purposes.

These items include employer-paid pension/profit sharing contributions, employer paid HSA contributions, employer-paid health insurance premiums, and cost of other fringe benefits.

Gather documents of business loans

Loan schedules and agreements should be examined to determine the appropriate taxes.

Gather records of all business insurance

  • General Liability Insurance: This includes the protection against risks as the result of bodily injury, property damage, medical expenses, libel, slander, the cost of defending lawsuits, and the like
  • Product Liability Insurance:  This includes financial loss as a result of a defective product that causes injury or bodily harm. 
  • Professional Liability Insurance: It is the protection of the business against malpractice, errors, and negligence in the provision of services to your customers.
  • Commercial Property Insurance: It is the protection of the business against the loss and damage of company properties due to a wide variety of hazards such as fire, smoke, wind and hail storms, civil disobedience and vandalism. 

Locate information on interest expenses

For businesses, interest expense can be a tax deductible item because it is a large part of the costs of doing business just like other overhead costs, provided, however, that it can be shown that the loan wasnecessary for the business.

Payroll data:

Collect payroll forms

 Gather a record of all payroll forms including reviewing Form 1099 for any contracted work.

List commissions paid to subcontractors

Commissions paid to subcontractors are subjected to applicable tax rates.

Collect information for your tax advisor on any commissions you have paid.

Record wages paid to employees

Gather information on all wages paid to the employees working within your business.

Wages paid to employees (forms W2 and W3)  and the federal and state payroll returns (Form 940, etc.) will need to be filed as part of your tax return.

Expense details:

Collate all advertising costs

Record your total advertising spending for the year. 

Use the form field below to note the amount.

Document all transportation and travel expenses

Record local transportation costs such as business trip (mileage) logs and receipts for public transportation, parking, and tolls.

Include information on travel away from home such as:

  • Airfare or mileage
  • Accommodation expenses
  • Meals, tips
  • Taxi, tips
  • Internet connection (hotel, Internet café, etc.)
  • Others

 This also includes repair bills and lease information.

Record office supply expenses

This includes pens, paper, staples, and other small costs. It also includes spending on computers, printers, and other more expensive office related equipment.

Record rental expenses

Include spending on office space rent, business-use vehicles, and renting costs of any specialist equipment.

Record the total rental costs in the form field below.

List any other expenses

Include details of any further expenses not covered by the previous categories.

This could be costs of repairs, maintenance of office facility, or other business related expenses.

List of assets and depreciation:

Disclose asset acquisitions

Itemize the total costs of any assets acquired over the taxable period.

This includes:

  • The initial cost of the asset (including any paid sales tax)
  • Description of the asset
  • Date put into service
  • The amount of time the asset is used for the business (versus for personal use) stated as a percentage of total utilization.

Work out your depreciation expense schedules

To assess the total value of assets held, the asset values need to account for depreciation

The accumulated depreciation is a contra account, which means that it acts as a deduction from the original value of the asset. 

When you calculate your figures, you should include:

  • The description of the asset
  • Date put into service
  • The original cost of the asset
  • Accumulated depreciation up to this tax year
  • Business use percentage (if applicable)
  • The recovery period of the asset (3 years, 5 years, 7 years, etc.)
  • Any Section 179 Expense (or first-year expense) taken in the first year of service

See the image above as an example

Document details of asset dispositions

Record the details of any asset dispositions. This normally refers to a direct sale of an asset the company held.

Record this information including:

  • The description of the asset
  • Date of sale
  • The sales price of the asset
  • Any expenses of the sale
  • Accumulated depreciation

Final forms:

Review & finalize supplementary forms

Check off the forms that apply to you once you have completed and reviewed them.

This is important to ensure that you have sufficiently met the requirements of your individual tax preparation. 

  • 1
  • 2
    Schedule A (Itemized Deductions)
  • 3
    Schedule C (Profit or Loss from Business)
  • 4
    Schedule E (Real Estate Income)
  • 5
    Schedule F (Profit or Loss from Farming)
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
    Form 2439 (attached to 1120-RIC or 1120-REIT)
  • 12
    Form 1098
  • 13
    Form 8839
  • 14
    Form 4684

Attach final 1040 form

Review your completed 1040 with a professional

You're almost there! 

Once you feel confident that you have completed your 1040 Form along with all supplementary forms, review all the documentation with your tax advisor/accountant to ensure that you have met all requirements.

Completing a 1040 form is a challenging process and seeking expert guidance is important to set yourself up for success!

Check out these 11 checklists to optimize your accounting processes

Schedule meeting with your tax advisor/accountant

You're almost there! 

Individual tax preparation 

For your individual taxes, once you feel confident that you have completed your 1040 Form along with all supplementary forms, review all the documentation with your tax advisor/accountant to ensure that you have met all requirements.

Completing a 1040 form is a challenging process and seeking expert guidance is important to set yourself up for success!

Check out these 11 checklists to optimize your accounting processes

Business tax preparation 

Once all materials have been gathered, you can begin to go through the different forms your company needs to complete. 

Arrange a meeting with your tax consultant

Organize all your documentation so that it can be easily understood and use the email widget below to arrange a meeting with a tax consultant to go through the filing process with you.

Make final adjustments

After reviewing your documentation with a professional accountant, there may well be some missing information or areas that need editing. This is completely normal and part of the process. 

Make those final adjustments so you send off the form with total confidence that you've nailed every section! 

Find any communications with the IRS

Exchange of printed official communications between the taxpayer and the IRS should be compiled as part of your documentation.

Submit to the IRS


Give yourself a well-deserved pat on the back.

It's now time to sit back, relax, and await the reward for all your hard work. 


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